Bangladesh, India launches Trade Transactions in Rupees

Bangladesh and India have launched a new trade mechanism that will allow them to settle trade in rupees. This is a significant move, as it will reduce the two countries' reliance on the US dollar and strengthen regional currency and trade.

The new mechanism was announced on Tuesday by the central banks of Bangladesh and India. Under the new system, banks in the two countries will be able to open nostro accounts in each other's currencies. This will allow them to settle trade transactions in rupees, without having to convert the currencies into dollars.

He stated at the inauguration ceremony here, which Indian High Commissioner Pranay Verma also attended, "The trade position between India and Bangladesh has seen remarkable growth, with both countries benefiting from their economic cooperation."

The governor of the central bank stated that the introduction of the Taka-Rupee dual currency card, which was "almost ready (to be) launched from September," would lower the transaction expenses associated with commerce with India.

However, frontier business between Bangladesh and India takes place in discrete locations known as "border huts," where small-scale exchanges of both currencies take place.

According to the formal agreement, trade will initially be conducted in rupees and then gradually in Bangladeshi currency Taka when the two countries' trade deficit narrows.

According to the most recent Export Import Data, Bangladesh exports goods worth USD 2 billion to India while importing USD 13.69 billion from India.

Over the past three years, the nation's exports to India have often exceeded the one billion dollar mark, and during the most recent fiscal year, they finally surpassed two billion dollars. India has emerged as Bangladesh's top export market in Asia due to its broad market.

Source: The Economic Times